A 40-year-old American woman has been gang-raped by four Nepalese men in a hotel room in the capital Kathmandu, police said Monday.

The victim, who has been living in Nepal on a business visa since 2013, was attacked on June 14 at a hotel in the capital's tourist hub of Thamel, a senior police officer told AFP.

"She had spent the evening with the men and they had been drinking. They later went to a hotel where she passed out. When she woke up she realised that she had been raped," said Senior Superintendent Hemant Bahadur Pal.

Two of the four suspects have been arrested and deny the allegations, Pal said. If found guilty, they men would face at least 10 years in prison.